David Baskin

Bank of Canada move of 50 bps. No surprise yesterday, 50 was the sweet spot. They'll take their lead from what the Fed does. The US today saw relatively bullish news on unemployment, as the Fed wants unemployment to increase, and jobless claims did that. This leads him to believe that inflation has topped out and is coming down. Central banks recognize that, and if they haven't finished yet, they're going to finish pretty soon.

The Fed announcement next week. Probably half a point, maybe a quarter if they see the data. The big number that will affect them is the cost of rental housing in the US, which seem to be coming down quite sharply. If they're convinced that the unfilled jobs vs. the unemployed is moving in the right direction, they might go up only a quarter, which would be massively positive for markets.

When to get into oversold tech? Right now is fine. What happened with tech stocks was not so much earnings driven as sentiment driven. Huge multiple compression, people banking less on growth and willing to pay a much smaller price for that future growth. AMZN and GOOG are way oversold. MSFT, which is more of a utility than a tech stock, is somewhat oversold. AAPL less oversold. All are attractive at these prices.

Dividend safe? About 20 years ago, TRP cut its dividend. Masses of widows and orphans descended on Bay Street with pitchforks and torches. Shareholder revolt. So a lot of things have to go wrong for it to cut.

Dividends for the oil and gas sector. For the mid-market like the PPLs and the KEYs and TRPs, where pricing is more stable and contracts are long term, the dividends are much safer. In the explorers and producers, they depend on the prices for the end product much more. They'll increase dividends when times are good and prices are high. But when prices fall, those dividends could become unsustainable. Investors understand that those are two different ends of the industry. One one hand you have your stable, utility-type pipelines, and on the other the more speculative producers that are price takers and not price makers.

CDRs explained. CDRs are Canadian Depository Receipts. For a long time in the US, if you wanted to buy European or Asian stocks, you did it with ADRs. Basically a trust that's set up. Now someone's done the same thing in Canada, so you don't have to deal with USD and the exchange. Doesn't change the tax treatment, as would happen in a mutual fund. It does relieve the burden of having to change the currency.

Are CDRs a good option for AMZN or AAPL? Sure. These stocks are so big and so liquid that it would work well for them. The sponsors of the CDRs would be very careful to use big, liquid names where the volume will be enough that you don't get an arbitrage situation where the CDR price is different than the underlying stock, because you don't want that.

With the special dividends, why not own? A timely question. Company feels they'll be debt-free very soon, returning 80% of cashflow to shareholders via dividends, special dividends, and buybacks. They believe they can make money with gas at even lower prices. He's impressed. Management doing a good job, good reserves. No reason not to buy.

Not the company it used to be, so many of its parts have been disposed of. Now it's a business jet manufacturer, a hot market at the moment. Balance sheet remains a mess, huge amount of debt and unfunded pension debt. Company now viable but he'd be cautious, as debt is being rolled over at higher interest rates.

Misses on one quarter, and it gets punished. Way, way oversold on not great news, but hardly disastrous. People panicked unduly. Premier renewables company with solar, wind, hydro. Not going away. Thinks dividend is safe, need another couple of bad quarters in a row before it's in danger. Bargain basement price. Usually get rewarded when there's a fast dip like this, once it gets out of the penalty box.

Really underperformed this quarter. BNS net interest rate margin didn't go up as much as the other banks, a worry. Used to like the international diversification, but that comes with a lot of risk. He likes TD much more.

(A Top Pick Jan 25/22, Down 16%) He underestimated how people would react to a price increase. Lost subscribers. Now offers ad-based service at a lower price. Very competitive environment. Pretty good buy at this price. Pretty good content.

(A Top Pick Jan 25/22, Down 17%) Stock price is a reaction to rising rates. REITs are competing with bonds, so why own a REIT when you can own a bond that's more predictable? Wonderful assets, best in Canada. Rent increases. Bond market is saying interest rates have peaked, so this will become more attractive.

(A Top Pick Jan 25/22, Down 8%) In CAD, you'd probably have broken even in the last year, so he won't complain. Biggest bank in the world, great management, wonderful assets. Pretty good stock, particularly at this price.

Loves it. Brilliant to put themselves in the centre of small- and mid-sized businesses almost everywhere in the world. Not going away. That's why he sees it more as a utility. Surprised by the selloff, great entry point. Dividend will rise.